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Pipeline bill passes House committee

The House Judiciary Committee late Thursday gave narrow approval to a bill to grant eminent domain authority to petroleum pipeline companies when they seek rights-of-way for building pipelines. But the 6-5 vote was much closer than the numbers would indicate; three of the "yes" votes came from members who said they would support the bill "for now," meaning the bill will be in for changes when it comes to the House floor for debate.

Senate Bill 14-093 and its 2013 predecessors have gone through three different committees in the House and/or Senate in the past two sessions: Agriculture, Local Government and on Thursday, Judiciary. Each committee has looked at the bill from different perspectives.

The Judiciary committee looked at SB 93 on the eminent domain issue, but members also raised concerns that most Colorado counties appear to lack any kind of process for approving pipeline locations, or siting.

Changes to SB 93 will likely touch on the local control issue. During committee testimony, member Rep. Mike McLachlan (D-Durango) noted that his home county, LaPlata, has an extensive review process for pipeline siting. Adams County Commissioner Charles "Chaz" Tedesco, whose board does not support SB 93, testified that his county also has a review process for pipeline siting.

But the state's number one county for oil and gas production, Weld County, has no approval process, and that's partly what led to the lawsuit and the 2012 Colorado Supreme Court decision that decided that petroleum pipeline companies did not have eminent domain rights.

Supporters of SB 93 continue to maintain that the bill would not grant new condemnation authority; that for more than 100 years petroleum pipeline companies have had the right to condemn and take land when they can't come to an agreement with landowners over pipeline rights-of-way.

May told the committee that SB 93 is a "technical fix," necessary because the Colorado Supreme Court "eliminated more than 100 years of established law." Under SB 93, petroleum pipeline companies must comply with all laws and regulations, although later witnesses pointed out that there are no laws or regulations, either state or federal, regarding the siting of petroleum pipelines.

"If we do not pass SB 93, pipeline companies will not be able to efficiently move oil and gas to market," leaving that transport to trucking or railway, which May said is a far more dangerous way to move those products.

"Today you will likely hear a lot of anger about oil and gas, specific disputes and concerns about pipeline safety. These may be valid issues and concerns, but existing law provides for these issues and concerns," May said.

May wasn't wrong about the anger. The sometimes-emotional hearing drew in witnesses, mostly from Northern and Northeastern Colorado, who are fighting the oil and gas companies over rights-of-way. Several noted they would meet with Tallgrass Energy the following day over that company's pipeline expansion in Logan County. They pleaded with the committee to reject the bill, arguing that granting eminent domain rights would take away any bargaining power they had with Tallgrass. Other witnesses told stories of oil pipeline company employees trespassing on their property, tearing up trees and damaging crops. Gene Kammerzell, owner of Arborland Nursery in Milliken, told the committee that Suncor had damaged his property and when he reminded them that the easement contract had provisions for arbitration over damages, their alleged response was "take us to court."

"This is not a technical fix," said attorney Ben Cohen, who represented Donna and Ivar Larson at the Colorado Supreme Court in Larson v. Sinclair Transportation. Cohen provided the committee with a history lesson on statutory interpretation in the 1900s.

The statute at issue in Larson was written in 1907. Cohen said that for decades, the pipeline companies have assumed the statute was a "general" pipeline statute, and that any company that wanted to lay a pipeline could do so with eminent domain rights. But in the 1900s, whenever the General Assembly passed a pipeline statute for condemnation, they always specified the purpose of the pipeline, he explained. The 1907 statute that SB 93 attempts to amend only dealt with electrical transmission. That also was noted by the Court in its 4-3 majority opinion. The Court did not accept this case lightly, Cohen added. They "knew it would upset decades of settled practice" regarding pipelines.

"It was a different statute. If the committee decides to enact this statute, you are working on a blank slate."

Logan County Commissioner Dave Donaldson raised another problem that may surface if SB 93 passes: criminal mischief. He explained that within the condemnation process, a company can go to court and while that is ongoing, can come back on someone's land and work on the project. Should they lose in court, they could be subject to criminal charges, and Donaldson noted that it takes only $500 in damage for criminal mischief to become a felony charge. The Tallgrass project is causing "anguish" in Logan County, he noted.

Brothers John and Larry Frasco of Logan County are both dealing with Tallgrass over rights-of-way issues. Larry Frasco, an organic farmer, said Tallgrass wants to put a 20-inch pipeline on his property. He raises wheat and millet, and told Tallgrass representatives that he could have no rocks on the property larger than 3 inches; anything larger would damage his combine. They refused, he claims, telling him the best they could do was 5 inches. "I have to pick up their mess. I didn't ask them to come in. There's no protection for us...They don't care about us out there. A private company should not have the right to take our land, put in pipelines and then walk away...How do you negotiate with someone [with eminent domain rights]? You want our land? Rent it from us per month or per year until the pipeline is taken out."

Committee member Rep. Joe Salazar (D-Thornton) spoke in sympathy with the witnesses who battle the oil companies. He also raised the possibility that SB 93 might be unconstitutional.

Attorney Tom Dougherty has worked both sides of the eminent domain issue. Speaking in favor of SB 93, he told the committee the bill would not create new authority for the petroleum pipeline companies. It would only confirm in statute the legal and practical application of Colorado law for the past 100 years. "This understanding was not challenged until the Sinclair case," he said.

Should the issue be left only to negotiation, there will always be someone who says "absolutely not" and added that landowners are never happy with their compensation. Dougherty also noted that lots of private entities have authority for condemnation with no public benefit, such as mining companies and cemeteries.

Salazar questioned Dougherty on how the pipeline companies will respond to landowners if the bill doesn't pass. The landowners "want bargaining power. If we pass the bill, [the companies] don't have any incentive to bargain." Dougherty disagreed, saying the companies have incentives to negotiate in good faith for a "whole variety of reasons" that he did not enumerate. Doughtery also admitted that under the terms of an easement, the pipeline companies would have the authority to say that a pipeline has to go where they want, not necessarily where the landowner wants it.

For Rep. Mark Waller (R-Colorado Springs), the issue is one of equity, stating that the power of condemnation creates an inequity in the negotiating process. Dougherty responded that "inequity is the reality at the end of the day...Inequity is inherent in any exercise of eminent domain." But he also explained that the most effective bargaining chip a landowner has is to take the condemning authority to court, which may delay a project for years and cost millions of dollars.

If that's the best bargaining chip, it's not a very good one, Salazar said later, noting that few farmers and ranchers can afford such costs. The Larsons had previously testified that they took out a $2 million loan against their property to fight Sinclair all the way to the Colorado Supreme Court.

Dougherty agreed with Salazar that pursuing legal remedies are costly for both sides, but "it's relative on who can afford it. The delays to a project can well exceed the legal cost," he explained.

SB 93 is supported by the Hickenlooper administration, the Colorado Association of Commerce and Industry and the South Metro Denver Chamber of Commerce, all who had testified previously in support of SB 93 when it was in the Senate. Carly West of CACI asked the committee to support the oil and gas industry, which she said brings 30,000 jobs to Colorado.

Nearing the hearing's end, Rep. Lois Court (D-Denver) said she was frustrated that counties don't do what's necessary to protect its citizens. She said she would vote for the bill but that the sponsor should commit amendments to strengthen safety issues and other "guardrails" on local control.

Kagan noted that the bill imposes the same framework that existed prior to the Larson decision. "It's rife with problems, not the least of which is that counties are not exercising their authority to make sure their citizens are protected. To simply restore the status quo is not the way we should do this. I'm not saying that pipeline companies should never have eminent domain" but this is not the right answer.

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